MBA
Professional Practicum
Angie Hoi-Chu
Chan (Student ID# 48760)
Peter Chung-Man
Cheng (Student ID# 48754)
Colan Man-Fai
Yiu (Student ID 48758)
Vivien Lai-Wa
Lee (Student ID# 48820)
Carol Kwok-Lan
Chung (Student ID# 48806)
Due date: May 7, 2005
As the construction industry has boomed during the
1970s in Hong Kong, skyscrapers and large-scaled projects are erected
everywhere. Hong Kong has concretized itself with modernity as it is assured as
one of the major international financial and trading centers. In the booming property
market, prices have been raised to an extraordinary level especially in the
late 1990s. In 2005, some of the prices even reach the record high.
Construction development has become a big business hence the money involved is
substantial. Furthermore, when there are a large sum of money and profit
involved, without doubt, everyone will try to get a slice of it.
Architecture is seen as “The
mother of all arts” while architects are seen as the designers who can inspire
and shape this world with structures.
However, as we enter the modern world where the construction
legislations have become more complex than ever, more disputes are involved.
Therefore architects have taken up the role as a “middle man” in many developments
due to the fact that Registered Architects have always been considered as a
profession with high ethics. Besides, the law does grant architects to have
certain powers and rights to keep the construction industry fair to all
parties.
Architects are bound by law to
comply with the standards of professional conduct embodied in the Architects
Act. However they possess authorization
to make certain decisions that could lead to a large amount of profit
variations to all parties; therefore architects always become the bribery
targets.
The Case:
CORE DEVELOPMENT has hired PC Architects Limited as
their design and consultant firm, to design and manage a construction
development in Central, Hong Kong. It is a multi-stories commercial building
with a contract sum expected to be around 100 millions. As their contracted
architects, PC Architects Ltd will receive a Design Fee from the client and
also a Management Fee for selecting an appropriate contractor (out of three)
from an open tender.
(PC Architects Limited was founded by Peter Cheng, and had been in this field for more than 15 years. With experiences in commercial and residential buildings in Hong Kong, Singapore and China, PC Architects now employs 50 people with 5 shareholders, with regional offices situated in both Hong Kong and Shanghai.)
As the PC Architects’ Head Designer, Peter is
responsible to select, NOT the cheapest price from those returned tenders, but
the most appropriate contractor through their past job experiences, reputations
and capabilities. With the project sum to be near 100 millions, the monetary
sums suggested by these contractors can vary up to millions. (Hence, each contractor is unaware of the
contract sum submitted by the others; it is also the architect’s duty to keep
those as confidential.)
After the tendering period, the tenders have come back
with contract sums provided by each contractor:
Contractor A:
90 millions
Contractor C: 110 millions
The selection process begins.
Peter then compares the projects sums and scope of works suggested by all
contractors, and a draft overview is formed:
Contractor A: This Company only has 3 years
experiences in this field; they might still do the job ok, but not enough past
job references. However, it beats the second closest price by a margin of 10
millions.
Contractor B: This Company has been in the business
for over 20 years. The price is fair, around what we have expected and within
budget. It also has a good reputation, seldom results in late completion of
works.
Contractor C: This Company has only 2 years
experiences with very little past job references. The price is over budget;
their last job resulted in late completion. This company cannot be considered.
After the analysis, Peter is leaning towards selecting
Contractor B when Contractor A approaches him. This contractor A has made a
business proposition, offering if they were selected, they are willing to hire
PC Architects Ltd as a separate consultant to their firm for this project with
a “Consultant Fee” of 3 millions. (This is always not considered to be bribery,
since separate contracts between all parties are common due to the complexity
of the projects.) Although it is counted as a legitimate action, this may
result in the affects of a fair selection judgment. (Hence, an architect is
hired by the client to find the most appropriate contractor for the best
interest of the client, and not for the best interest for the architects firm.)
Whilst Peter hesitates which Contractor should get the
project, he then opens the company handbook just on his desk. He browses the
pages and gets into his first sight:
All staff members of PC Architects Limited is abided
by the company’s value statements, in which are important for everyone to
follow:
* An obligation to maintain high standards of morality
and
integrity.
* Shall provide its service to meet their clients’
best interest.
* Always owes the client a duty of care, honesty and
fidelity.
* Should advocate the importance of the code of
ethics.
Questions For Discussion:
1. Based on the guidance of the
professionalism and ethics, if you were Peter and select Contractor B without
any consideration of additional benefits for your firm. State reasons to
support your decision.
2. Or in the views of all shareholders of
PC Architects Ltd, you were to select Contractor A, due to the fact that
Contractor A will assign another “New Job” and have an excuse to gain an extra
“Consultation Fee” for PC Architects Ltd. State reasons to hold with your
judgment.
3. Which of the above decision do you
prefer? Will you keep this attitude consistently in decision making in the
future? Give statements to support this ruling.
END